BAKER & DANIELS
           300 North Meridian Street, Suite 2700
             Indianapolis, Indiana  46204-1782
                      (317) 237-0300
                    FAX (317) 237-1000
                   www.bakerdaniels.com




                                                  EXHIBIT 5

January 13, 1998


American General Finance Corporation
601 N.W. Second Street
Evansville, Indiana  47708

      Re:  5.90% Senior Notes due January 15, 2003

Ladies and Gentlemen:

      We have acted as counsel to American General Finance
Corporation, an Indiana corporation (the "Company"), in connection
with the issuance and sale by the Company of $200,000,000 aggregate
principal amount of the Company's 5.90% Senior Notes due January
15, 2003 (the "Notes"), including the preparation of:

      (a)  The Company's Registration Statement on Form S-3
(Registration No. 33-55803) (the "Registration Statement"), including
the Prospectus, dated December 14, 1994, constituting a part thereof
(the "Prospectus").

      (b)  The Pricing Agreement, dated January 9, 1998, including
the Underwriting Agreement incorporated therein, between the Company
and the underwriters of the Notes (together, the "Pricing Agreement").

      (c)  The Indenture, dated as of October 1, 1994, between the
Company and The Chase Manhattan Bank (formerly The Chase Manhattan
Bank (National Association)), as Trustee, pursuant to which the Notes
are to be issued (the "Indenture").

      For purposes of this opinion, we have examined originals or
copies, identified to our satisfaction, of such documents, corporate
records, instruments and other relevant materials as we have deemed
advisable; and we have made such examination of statutes and decisions
and reviewed such questions of law as we have considered necessary or
appropriate. In our examination, we have assumed the genuineness of
all signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as
copies,  and the authenticity of the originals of such copies.  As to
facts material to this opinion, we have relied upon certificates,
statements or representations of public officials, of officers and
representatives of the Company and of others, without any independent
verification thereof. 

      The laws covered by the opinions expressed herein are limited
to the laws of the State of Indiana.

      On the basis of and subject to the foregoing, we are of the
opinion that:

      1.   The Company is existing as a corporation under the laws
of the State of Indiana.

      2.   The issuance of the Notes has been duly authorized by
all necessary corporate action of the Company and, when the Notes have
been duly executed, authenticated, sold and delivered in accordance
with the terms of the Indenture and as described in the Registration
Statement and in the Pricing Agreement, the Notes will be valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws of general applicability
relating to or affecting enforcement of creditors' rights or by
general equity principles.

      We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading
"Legal Opinions" in the Prospectus.  In giving such consent, we do not
admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or
the rules or regulations of the Securities and Exchange Commission
thereunder.

                          Yours very truly,

                          /s/ BAKER & DANIELS